MNI BRIEF: Policy Move Eyed If Inflation Meets 2% - BOJ's Ueda
Bank of Japan Governor Kazuo Ueda said on Tuesday the BOJ would tweak the degree of easy policy through adjustments to the unsecured overnight call loan rate if inflation rises to its 2% target as expected.
Ueda, however, told reporters the Bank must maintain easy policy as the underlying inflation trend remains below this level.
The BOJ must manage monetary policy to achieve the 2% target and the timing of policy adjustments will depend on economic and price conditions at that time, he noted, adding the Bank will inject liquidity into financial markets to maintain financial system stability should markets destabilise due to geopolitical risks.
The BOJ is closely examining how such move affect the underlying inflation trend, Ueda stated.
In remarks made in the U.S. last week, Ueda noted the Bank would “very likely” raise interest rates if underlying inflation continues to rise, however, the governor noted the comments were not new.
MNI reported Monday BOJ officials fear the soft yen could increase inflation and prompt an October rate increase. (See MNI POLICY: BOJ Sees Risk of Earlier Inflation Rebound)